Witnessess: Federal Grand Jury Investigating Phen-fen Settlement

COVINGTON, Ky. (AP) - A federal grand jury in northern Kentucky is investigating the handling of a legal settlement involving the popular diet drug fen-phen.

Plaintiffs in a lawsuit over alleged misappropriation of the settlement told The Courier-Journal newspaper that they've been asked to appear before a federal grand jury in Covington next week.

Lexington lawyers Shirley Cunningham Junior, William Gallion and Melbourne Mills Junior are being sued by more than 400 former clients who allege the lawyers took (m) millions of dollars more than they were entitled to in fees. The money was from a 200 (m) million dollar settlement by people who took the drug that was removed from the market due to safety concerns.

The lawyers have been suspended from practice and the judge who approved the settlement was forced to step down.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

Witnessess: Federal grand jury investigating phen-fen settlement

LEXINGTON, Ky. (AP) - Three Lexington lawyers accused in a lawsuit of misappropriating more than $64 million from Kentucky's fen-phen settlement are being investigated by a federal grand jury, according to two people who said they were called to appear before the panel next week.

Sonya Pickett of Lexington and W.L. Carter of Lawrenceburg, two plaintiffs in the lawsuit, told The Courier-Journal Louisville that they have been asked to appear next Thursday before a grand jury in Covington. Carter said the FBI interviewed him Wednesday.

Two other plaintiffs in the civil case, Angela Peace of Corbin and Jackie McMurtry of Louisville, told the newspaper that they had recently signed releases allowing FBI agents to inspect their legal files.

Pickett and Carter said they were asked to testify about attorneys Shirley Cunningham Jr., William Gallion and Melbourne Mills Jr., the newspaper reported.

The attorneys were sued by more than 400 former clients who alleged that they took millions of dollars more than they were entitled to in fees from the $200 million diet-drug settlement.

The lawyer for Mills, Jim Shuffett, said he expects his client to be indicted. Gallion didn't return calls Wednesday to his home in Florida. Cunningham had changed his phone number in Florida to a private listing and couldn't be reached for comment. Their attorneys also didn't return phone calls.

Gallion, Cunningham and Mills have previously denied wrongdoing.

Mills said earlier this week that the FBI had seized records from him, but he said he'd been instructed not to comment further.

FBI spokesman David Beyer and Courtney Norris, a spokeswoman for the U.S. attorney's office in Lexington, said they couldn'tcomment.

Mills said federal investigators seized legal records from him several weeks ago. Shuffett said investigators took 448 boxes.

The attorneys represented 441 plaintiffs in a lawsuit against American Home Products. They settled the case in 2001 on behalf of their clients, who split $73 million.

Mills, Gallion and Cunningham were found last year to have breached their duties to the clients for taking millions more in fees than allowed under their contracts. Each was paid more than $20 million.

Joseph Bamberger, the judge who approved the settlement, was forced to resign in February 2006 and publicly admonished for conduct that the state Judicial Conduct Commission said "shocked the conscience."

More than 400 of the former plaintiffs have accused the Lexington attorneys and Stan Chesley of Cincinnati of misappropriating tens of millions of dollars from the settlement. The suit asks for that money to be returned and for the lawyers to forfeit another $62.2 million in fees.

Frank Bentley IV, a lawyer representing Chesley, said he is not a target of the criminal investigation.

Fen-phen was a popular diet craze in the 1990s when researchers found that when mixed together, two appetite suppressants, fenfluramine and phentermine, caused weight loss. The U.S. Food and Drug Administration removed fen-phen from the market in the fall of 1997 after it was shown to cause heart defects.

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